It is an established fact that mineral resources are often difficult to control and the resource curse tends to define the lives of many mineral-rich poor countries.Even the colonial power, Britain, had problems controlling our mining sector, as it was forced to make deals with chiefs in mining areas who appropriated state transfers and rents for their own benefits. However, even though the colonial mining companies reaped most of the benefits and transferred them overseas, the problem of mass leakage of revenue from the formal state sector was not extensive. The colonial state also had very limited ambitions in developing the country as it administered Sierra Leone and other colonies on the cheap. As a colonial state, we were allowed to spend only what we could generate as revenue: less revenue generation meant less expenditure. Our people therefore did not expect much from the colonial power.It is, however, a different matter when the state has lofty ambitions or expectations are raised through slogans about independence delivering prosperity for all. The most important change in the way our revenues were harnessed occurred between 1973 and 1985, which also marked our rapid descent into authoritarian rule, large-scale corruption and, subsequently, economic decline. It is important to grasp two key issues in this change as they came to define the path that transformed us into a failed state in the 1990s. The first was the failure to develop a healthy and productive relationship between the state and the budding business elite for economic growth and transformation. Concerned primarily about political survival and illicit accumulation of rents from our natural wealth, the political elite distrusted indigenous African entrepreneurs and refused to cultivate them as partners in the lucrative mining sector that would have provided a foundation for investment in other sectors of the economy. Instead, Lebanese businessmen, who were perceived as apolitical and therefore non-threatening to the political elite, became the state's partners in the production and sale of our natural resources. The American Political Scientist, William Reno (1995), provides data on licensed diamond dealers, which show that whereas in 1968 African dealers accounted for 85 percent of the licences and Lebanese dealers only 15 percent, by 1973, the Lebanese had become the dominant players, accounting for 78 percent of the licences and Africans only 22 percent. Now, the unfortunate thing about this development is that the same state that favoured Lebanese enterprise in the mining sector had (and indeed still has) a racist citizenship law that discriminated against this key business group. The Lebanese were thus given free reign to exploit our resources and make money, but the citizenship laws were such that this group did not have the incentive to invest that money locally in productive sectors; and nor did the state, which was now run by a kleptocratic elite, compel members of the group to do so despite the enormous patronage given to them. Compare this experience with Malaysia, which is also a multi-ethnic state. Even though the Malay were considered indigenous, the citizenship status of the Chinese, who dominated business, was never questioned; and the Chinese joined the Malay (even if as unequal partners) in forming the political coalition that governed the country and advanced the project of economic transformation. The second development that formed the basis for economic decline and state collapse was the informalisation of our economy and public sector. The institutions established during colonial rule and the first decade of independence to manage our resources were systematically dismantled after 1973. The transnational mining company, the Sierra Leone Selection Trust, was rendered ineffective; and the state-dominated company, the National Diamond Mining Company, was stripped of its monopoly in carrying out mining operations on its rich diamond deposits and export activities. Individuals with strong patronage links with the state took control of the mining sector. The end result was a concentration of the national wealth in the hands of a few powerful individuals (the most well-known being Jamil Mohamed and Tony Yazbeck) but without state incentives and sanctions to channel such wealth into the productive sectors. By 1980, Reno reports that the official mining company, the NDMC, accounted for only 29 percent of legally produced diamonds, compared to 94 percent in 1973. The informalisation of the mining sector was extended to other sectors, such as the produce marketing board and a host of parastatals, such as the ports (Luke, 1984) and the trading, hotel, transport, communication, banking and utility sectors. Government revenue dried up very quickly, debts mounted, especially after the organisation of the extravagant Organisation of African Unity Summit in 1980 that was estimated to have cost USD200 million, and the state became highly dependent on foreign aid. All of these occurred in an international environment that was now highly unfavourable, as terms of trade for primary commodities deteriorated. Informalisation of the economy and the public sector meant that the state even lacked the discipline to implement IMF reforms in the 1980s, leading to a triple pain for the nation: austerity that further reduced living standards, more debt and no growth.What does all these mean for nation building and economic transformation today' We have surely made important strides since the war in rolling back informalisation, as can be seen in the increase in domestic revenue and value of exports that pass through official channels, as well as efforts to revive the agricultural sector and improve our infrastructure and energy supply. However, we are still a long way from combating the problem. The indictment of a large number of public figures by the Anti-Corruption Commission and emergence of new cases underscore the point that private interest continues to trump public good when individuals are entrusted with public office. Indeed, the challenge of effective resource management and dangers of informalisation, corruption and capital flight are even more acute today because of the exponential growth of our resource base and rise in global prices of mineral resources. And the danger of a few players monopolising our resource wealth and colluding with political and administrative elite for ridiculously high tax concessions, low royalties, and to transfer wealth illicitly overseas, is still real. The recent decision to renegotiate mining contracts, in response to pressures from donors and civil society advocacy groups, and attempts to rush through new mining legislation in parliament without proper debate, send conflicting signals. They buttress the point that there are still huge governance problems in matters relating to resource management.
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